In its annual review of the pay of FTSE 100 chief executives and average UK employees the High Pay Centre, now working with the Chartered Institute of Personnel and Development (CIPD), found that by 4th January, dubbed Fat Cat Thursday, the UK’s top bosses made more money than the typical UK full-time worker will earn in the entire year.

Although the CIPD and High Pay Centre found that FTSE 100 CEO median pay fell to £3.45 million in 2016 down from £3.97m in 2015 this compares with the median UK gross annual salary for full-time employees of £28,758. Therefore despite the year-on-year reduction in total pay among FTSE 100 bosses, the ratio of CEO pay to the pay of the average full-time worker stands at 120:1. The publishing of pay ratios is set to become mandatory as part of the government’s corporate governance reforms.

Luke Hilyard: Investors need better disclosure of employee value

Responding to the CIPD and High Pay Centre figures Luke Hildyard, stewardship and corporate governance policy Lead at the Pensions and Lifetime Savings Association, said: “Pension scheme investors use information about the employment models and working practices of the companies they invest in, including the pay gap between the top executives and the rest of the workforce, as indicators of the corporate culture. While companies spend a lot of time devising complicated and very generous pay awards, our Hidden Talent research found that only 7% of FTSE 100 annual reports detail the ratio between the CEO’s pay and the wider workforce; only 21% provide evidence of how much they are investing in training and staff development; and just 7% show how much they rely on agency workers or other types of insecure employment.“

Manifest’s latest remuneration survey analysing the December 2016 year-end annual reports of 579 companies found that a small number of FTSE 100 companies push up the average total remuneration creating a distorted picture of executive pay.

Manifest’s analysis found that five companies have a major impact on the single total remuneration figures (STR): WPP, Carnival, Reckitt Benckiser, AstraZeneca, RELX and BP. If all FTSE 100 companies are considered the average STR figure is £4.29m but excluding these five firms it is £3.96m. The survey also found that the STR decreased by an average of 15% for the top 100 companies, mainly as result of lower proportions of LTIs awards vesting, combined with lower payouts from outliers, such as WPP and Reckitt.

FTSE 100 chief executives saw their average salary rise by 10% in 2016 and 14 of these CEOs received a pay rise above this level. The change in the average salaries reflected a minority of companies which have reduced variable pay opportunity and increased salary to compensate the report states.

Last year Manifest analysis for the Financial Times (12 May 2017) found that FTSE companies were avoiding confrontations with shareholders and high levels of dissent over remuneration by amending pay policies or in some cases withdrawing pay resolutions to avoid defeats at AGMs.

Manifest’s in-depth say on pay reports for listed companies provide comprehensive peer group comparisons of executive pay as well as remuneration trends. If you would like to receive a sample, please email info@manifest.info.